Avana’s Sundip Patel talks about his move to provide credit in
emerging middle-class markets that have strong hotel pipelines.
GLENDALE, Arizona – An American-based East Indian lender is
heading to India to expand his private credit platform, starting with a $25
million commitment and within three years plans to add a more institutionally
driven and specialized hospitality real estate finance program.
Glendale, Arizona-based Avana, led by CEO Sundip Patel, has secured
regulatory approval from the Reserve Bank of India to begin financing
hospitality projects in India. While most might imagine the process being
cumbersome, Patel said it was pretty straight-forward with rules and
regulations well published in English. Start to finish it took about 14 months
to complete.
He told Hotel Investment Today he will start small with
hospitality support items anywhere in the supply chain, ranging from $100,000
to $350,000. As Patel grows the team and likely at the three-year mark, he
expects to start property-type lending.
“We will get through the teething pains, build up the
infrastructure and team size,” Patel said. “As that grows and jells, we’ll go
after the property side of the business.”
Hotel lending strategy
When he is ready to move into property lending, Patel
expects to raise institutional capital to the tune of $250 million. He said it
helps that he already belongs to hospitality networks in India and has local
hospitality owner friends who have brands like Holiday Inn, Choice and Marriott.
We will get through the teething pains, build up the infrastructure and team size. As that grows and jells, we’ll go after the property side of the business.
Sundip Patel
Avana will take senior positions in capital stacks for
property loans and Patel expects to focus on limited-service, extended-stay and
what he refers to as boutique brands like Oyo, which has a huge following in
India. “I doubt we’ll get into full-service businesses until we have what I
call an institutional ready framework and foundation,” Patel added.
Patel said they will likely look at tier two-level cities
when they start property lending, adding that Avana will also look for hospitality
supply chain opportunities (caterers, florists, dry cleaners) within tier one
markets.
This strategic expansion positions Avana to tap into India's
rapidly growing economy, projected to grow at 6.5% to 7% annually, while
addressing a $300 billion credit gap facing the country’s 63 million Micro,
Small, and Medium Enterprises (MSMEs). For U.S. stakeholders, this represents
an entry into a market that is both economically vital and underpenetrated by
formal credit, particularly in sectors where Avana already has deep expertise,
such as hospitality, MSMEs, and real estate-backed lending.
Within this landscape, Avana sees strong potential in
India’s hospitality sector, where current loans total approximately $20
billion, including $3 to $4 billion from Non-Banking Financial Company (NBFC).
The industry is projected to grow at 12% annually through
2030, reaching over $30 billion and adding 500,000-plus new hotel rooms. For
our U.S. hospitality partners, this expansion presents a significant
cross-border growth channel, supported by Avana’s financing models and
relationships. Avana can now deploy capital directly in India without
intermediaries, enabling faster loan processing, stronger borrower
relationships, and more efficient use of investor funds.
To source potential clients, Patel said Avana will work with
the Indian equivalent of brokers call Direct Selling Agents.
Patel also said lending criteria will be no different in
India, following the same grounded discipline that they’ve had in managing
private credit. “It has to make sense. We have to protect the downside risk. We
have to look at everything beyond just what we’re seeing on paper,” he said. “We
have to get out there and learn the areas, the people were dealing with and
grow the portfolio.”
The only reason I am prepping for the two markets is the middle-class segment. They’re emerging and growing at a rapid pace. So, if I’m going to be somewhere, I’d rather be where the tide is lifting all boats.
Sundip Patel
For background, Avana is 23 years old and Patel said they
have done some $6.6 billion in transactions ($2 billion in hotel lending). Today,
Avana is managing about $1 billion in assets with 70% to 80% in the form of
hotels.
Moving forward in India, Patel also said he hopes to service
inbound U.S. hotel investors.
“There are some regulations as to how that money can be brought
into India from U.S.-based investors if they want to invest through a structure
like Avana’s in private credit,” Patel said. “That goes through another
governing body called SEBI and we have to be licensed under SEBI. We’re not
today, just to be very clear. We would have to get the SEC equivalent licensing
done to bring in U.S. based investors through a fund-type structure to invest
in property.”
That is part of Patel’s longer-term strategy – becoming licensed
and regulated so he can attract capital from all non-India based investors,
predominantly from the U.S.
The company has opened its first regional office in Pune,
India, and plans to launch direct commercial lending operations to MSMEs in
India within the next six months. Patel, who also offices out of Bahrain, said
his next move will be to the Kingdom of Saudi Arabia, where he is undergoing
the same approval processes.
“The only reason I am prepping for the two markets is the
middle-class segment,” Patel added. “They’re emerging and growing at a rapid
pace. So, if I’m going to be somewhere, I’d rather be where the tide is lifting
all boats.”
Patel
suggested the U.S. lending community to follow his lead. “Look at growing your
development business, or at least diversifying your revenue base in other
markets,” he said. “India’s as good of a place to start because it’s quite
clear and not very convoluted. They speak English. Everyone speaks English,
which is beautiful, and the rules are very clearly defined.”